Assignment By: Fatima Shahzad

Roll Number: KC- 1291

BBA 4th Semester
Lecturer: Ma’am Aneela
Department Of Management Sciences.
Karachi Campus.

Topic: Persuasive Speech

Date of Submission: 26st October, 2022

Political unrest decelerates Economic Growth

Introduction:
The motive of this essay is to determine the impact of political instability
on economic growth. Political stability is an important element for economic
 development as political instability disrupts not only the developing countries
but also the developed countries.
When there is political instability in the country, it leads towards the
deduction of foreign investors which ultimately leads towards the low
economic growth. The economy can severely be vulnerable to political
instability.
1. Why political unrest disrupts the economic conditions.
2. Some people believe that politics doesn’t affect the economic
conditions and I wanted to change that perspective.
3. I’ll discuss three reasons for that: terrorism, govt. type and election
year.

Political Unrest:
Political instability is regarded by economists as a serious malaise harmful
to economic performance.
Political instability is likely to shorten policymaker’s horizons which can lead to
making difficult macroeconomic policies. It may also lead to a more frequent
switch of policies, creating volatility and thus, negatively affecting
macroeconomic performance.
 The standard definition of political instability is the inclination of a
government collapse either because of conflicts or intense competition
between various political parties.
 Also, the occurrence of a government change increases the likelihood of
subsequent changes. Political instability tends to be persistent.

For example:
In Pakistan, there are so many different political parties each of them have
different group of followers which results in many disputes.

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ECONOMY:
An economy encompasses all activity related to the production, consumption,
trade, and distribution of available goods and services. The management of
those resources is used to satisfy the needs of the people, businesses,
organizations, and governments in a specific area.

Terrorism and its affects:

In Pakistan, terrorism primarily increased after 9/11, when Pakistan began
playing its role as a front line state against terrorism. Both internal and external
forces are promoting terrorism in Pakistan. These terrorist activities have
negatively affected economic growth in Pakistan.
Terrorism Index in Pakistan averaged 8 from 2002 until 2021, reaching an all-
time high of 9.21 in 2011 and a record low of 6.12 in 2003.
Figure 1 shows GDP growth and deaths by suicide attacks in
Pakistan. Figure 1 clearly indicates an inverse relationship between economic
growth and terrorist attacks in Pakistan, i.e. when terrorism is low, economic
growth is high, and when terrorism is high, economic growth is low.

Figure 1. GDP growth and deaths by suicide attacks in Pakistan (2002–2015).

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Inconsistent political government:
Research shows that the countries facing low economic growth are the victim
of irregular flow of government exchange due to political unrest. It is evident that
economic development was severely affected in those countries where
government shuffles were unanticipated.
For example:
No Prime minister of Pakistan has yet served their full five year term. As
a result, it badly affects economic activities and thus reduces economic
development of the country.

Christian Bjørnskov – Does public ideology affects economic growth?

Public Choice (2005)

Election years:
In case of Pakistan the above argument fits well. Taking into account
the tenures of Pakistani regimes from 1999 to 2022, it is obvious that due to
political disparity the country’s economic growth remained low, corruption
increased and unemployment and low production were witnessed.
For example:
1. In 1999 when military regime ousted civil government in Pakistan, the
country’s economy was growing at 4.2% rate and by the end of military
regime in 2008 the economic growth stood at 1.7%.
2. Similarly, during the tenure of PPP regime from 2008 to 2013 the country
faced massive increase in corruption and low economic growth owing to
surge in political instability which increased to -2.6% in 2013 compared to
-2.4% in 2008.
3.  If we observe the tenure of 3.5 years of PTI government from 2018 to 2022
the political turmoil increased and from the very first day of Imran Khan’s
regime the opposition political groups started protesting to disregard PTI
government’s performance.

“3 years, 7 months and 23 days”

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Conclusion:
To conclude, political unrest badly impacts economic activities in the country
and results into slow economic development. Therefore, stable political
system must be established in the country. As political stability is the back
bone of a country to run governance system smoothly.
A firm political system strengthens efficient policy mechanism, institutional
effectiveness and regular political exchange i.e. exchange of governments
through regular elections or whatever the way of power exchange a country
possesses.

“The Great Depression, like most other periods of severe unemployment, was produced by government
mismanagement rather than by any inherent instability of the private economy.”

~ Milton Friedman

Research links:

https://www.tandfonline.com/doi/full/10.1080/1331677X.2019.1638290

https://the-impact-of-political-instability-on-economic-growth-in-pakistan-application-of-arch-model.pdf

https://moderndiplomacy.eu/2022/04/16/political-instability-reason-for-low-economic-growth-in-pakistan/

1 rural areas

2 judicial, no justice for poor

3 extra privileges

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